A collection of best practice articles to help grow companies with an emphasis on finance. The goal of the blog is to explain how these best practices work, enabling anyone to put these ideas to immediate use. Articles are written by Matt H. Evans, CPA, CMA, CFM

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NOTE: Effective January 1, 2017, I will no longer post new articles since I am now fully retired.

Tuesday, August 11, 2015

Everyone Should Have a Dashboard

Distinguishing
high and low performance often requires a common set of metrics. Applying
standard metrics across different positions can drive exceptionally high levels
of performance across a company. This is often found in the world of sports.
Examples include a baseball pitcher’s ERA (Earned Run Average), a football
quarterback’s passer rating (QPR), or the average per game metrics applied to
basketball players – Points per Game, Rebounds per Game, Assists per Game,
Steals per Game and Blocks per Game. This standard framework binds the company,
allowing managers to quickly size up individual players and identifying those
who need coaching.

Similar to
sports, businesses should develop a framework for recognizing performance
across the workforce. Even without specific metrics for a job, organizational metrics
can be deployed. Examples include:

·Workforce Turnover – Measure how many people
leave the company over time. You should also qualify this measurement by
looking at who is leaving. There is a difference between key personnel leaving
vs. underperformers.

·Cost to Acquire – What does it cost to find,
recruit, and place a person within your company?

·Level of Productivity – How productive are
people in terms of output, sales calls, hours billed out, etc.?

·Sales per Person – What are revenues per
employee? This metric is often easy to compare to the competition.

·Employee Satisfaction – How do employees view
management? What do they think of the company? You should evaluate satisfaction
levels at various locations to help identify if one group or business unit has
a potential management issue.

In order to
drive performance, you should develop a company-wide framework that uses
dashboards; from a higher organizational level down to the employee. Everyone should
have a dashboard that aligns and binds the company together. As you perfect
your metrics, you can link a portion of the employee’s pay to their dashboard
performance. A common practice is to make 10% to 20% of a person’s pay
variable, dependent upon their dashboard scores. If you fail to link pay to
performance, the metrics may not drive performance.

It is
important to recognize that the best dashboard systems have several components
for full functionality:

Employee Profile – You have to capture
information about the employee such as job title, department, years of service,
location, etc.

Performance Tracking – You will need to
track performance goals and objectives. This will allow Supervisors to review
progress over time.

Development Plan – Each employee will
have a development plan to grow, learn and increase their respective skills.

Manager’s View – Employees will be tagged
so that higher level managers can review all employees in the department,
section or business unit. This layer should also include some advanced features
for communicating corporate messages, soliciting feedback, and sharing of
important data.

It’s also worth
noting that senior managers prefer dashboards over spreadsheets. Dashboards
provide a single consistent platform, bringing transparency across all parts of
the company. If you couple this with great reporting and drill down analysis,
then you have a foundation for managing your performance.

Communication
is mostly visual and if you want to manage your business, you have to
communicate performance visually. Displays can include colored lights, bar
charts, graphs and gauges. This is the power of dashboards – easy and direct
communication that everyone understands. This is why everyone should have a
dashboard.